The Law introduces a set of new rules into the Luxembourg Civil Code in order to fix certain malfunctions in the commercial real estate market, creating a level playing field and granting better protection for both, tenants and landlords.
Until today, the commercial lease was governed by the general principles of freedom to contract and the autonomous will of the parties as set out in the Luxembourg Civil Code.
In recent years the lack of protection for tenants, especially the limited pre-emptive right when the time came to renew the lease, were not in line anymore with the nature of the investments made by the tenants and did not give sufficient comfort to the latter for planning ahead.

Respecting the principle of freedom to contract, the Law creates a clear and practical legal framework for a fair landlord-tenant relationship and a level playing field for a healthy and thriving commercial real estate market.

A commercial lease is any lease of real estate intended for the exercise of a commercial, industrial or craft activity. It has to be noted in this respect that the exercise of both an administrative or a liberal activity was also included in the initial scope.

No "pas de porte"

The pas de porte (key money) and other commissions asked for by landlords have been prohibited.

Limited rental guarantee

The rental guarantee can't exceed 6 months' rent and can take the form of a bank guarantee on first demand, an insurance or any other guarantee.

Sublease is allowed

You may assign the commercial lease or sublet the premises under certain conditions. You have to notify the assignment or sublease to the landlord with a copy of the contract. However, you will not be able to charge the subtenant higher rent than the main rent, unless you have made investments in the premises.

Right to renewal

You hold a right to renewal. To use it, you have to send a notice to the landlord 6 months before the termination date. Upon receipt the landlord has to respond within 3 month. The refusal has to be motivated within the limits of the Law (i.e. personal use by the landlord or by a first decree descendant; if the landlord intends to no longer rent premises for the exercise of the tenant's specific activity; in case of reconstruction or transformation of the premises).

The landlord can refuse the renewal without any justification after 9 years. However, the landlord, or the new tenant, would have to pay an eviction indemnity in order to terminate the contract. If the amount of the eviction indemnity is not set out in the lease contract, the justice of the peace (juge de paix) is competent to fix the amount based on the market value of the business activity.

Pre-emption right

You hold a pre-emption right, when your lease contract has been in effect for more than 18 years, unless the premises are the subject of a sale by auction or are assigned to a relative of the landlord.

Shorter eviction period

Your right of forced eviction has been reinforced. The possibility of a Court granting two six-month deferments in a row has been reduced to one deferment of no more than 9 months. A deferment is only granted if, at the time of the introduction of the application, the tenant has paid all rents and advances on charges due. The judicial decision is not subject to opposition or appeal.

Right to refuse renewal

Obviously contrary to what has been set out above, except in the case of tacit renewal for an indefinite period, tenants hold a right to renewal. They have to send a notice 6 months before the termination date. Upon receipt you have to respond within 3 months.
Your refusal has to be motivated within the limits of the Law (i.e. personal use or use by your first degree descendent; if you intend to no longer rent premises for the exercise of the tenant's specific activity; in case of reconstruction or transformation of the premises).

You can refuse the renewal without any justification after 9 years. However you, or the new tenant, would have to pay an eviction indemnity in order to terminate the contract. If the amount of the eviction indemnity is not set out in the lease contract, the justice of the peace (juge de paix) is competent to fix the amount based on the market value of the business activity.

6 months' notice

Tenants are subject to at least 6 months' notice for termination, to allow you to find a new tenant.

* The Luxembourg law of 3 February 2018 on the commercial lease and amending certain provisions of the Luxembourg Civil Code entered into force on 1 March 2018, there is however a transitional period of 1 year for subleases.